General Motors acquires Cruise Automation
GM stepped up its commitment to self-driving cars by acquiring last Friday plans to acquire a San Francisco firm that developed a system for retrofitting existing vehicles with autonomous-driving software. Terms of GM’s deal with Cruise Automation were not disclosed. According to people familiar with the matter, the deal is valued north of $1 billion, which would make Cruise Automation an Unicorn in terms of Silicon Valley startup valuations.
A growing portion of cars are sold with semi-autonomous features, such as automatic braking or lane-keeping assistance, but the introduction of vehicles capable of operating without human intervention still faces regulatory and technological hurdles. By snapping up Cruise’s small operation, GM adds a team of engineers who have been developing sophisticated autonomous-vehicle software on a relative shoestring in an environment much nimbler and more casual than Detroit’s sprawling engineering centers.
GM spends billions of dollars on research and development annually and has been working on autonomous driving for decades, though only recently it has stepped up its activities to the next level. Cruise Automation, founded in 2013 by a 20-something entrepreneur with venture backing, has raised $20 million and was recently valued at less than $100 million.
The deal is expected to close by the end of the second quarter, but Cruise has already begun touting the relationship on its website, inviting potential job candidates to “join the driverless revolution.”
Detroit is racing to keep up with Silicon Valley, which has made big strides in penetrating the auto industry following the initial success of Tesla Motors Inc., Uber Technologies Inc. and other startups that are credited with shaking up the car business. Alphabet Inc. ’s Google X project and Apple Inc. are both working on cars in a potential threat to established auto makers.
GM has made a series of moves to prepare for the transition. Its portfolio of vehicles with semi-autonomous features has grown, and it is expected to launch in 2017 a more-advanced version of Super Cruise, a system that allows for hands-free driving on highways.
In January, GM announced a $500 million investment in ride-hailing service Lyft Inc., saying the partnership will help establish a network of self-driving cars. That move is coupled with other so-called mobility ventures, including the creation of an in-house car-sharing service called Maven and the acquisition of assets belonging to Sidecar Technologies Inc.
In an interview, GM President Dan Ammann said the Cruise acquisition provides foundation for faster development and the company will recruit to expand the team. ”We think this capability is critical to where we want to be in the future,” Mr. Ammann said. “